Intel Expects Work Force to Shrink by 25,000

Intel, a once-dominant force in the semiconductor industry, announced on Thursday that it expects to reduce its global workforce by over 25,000 employees as it continues implementing restructuring measures aimed at reviving the company’s struggling operations.

The company, which employed approximately 108,900 individuals at the end of last year, now forecasts that its headcount will fall to around 75,000 by the end of 2025. This significant reduction will be driven by a combination of layoffs, natural attrition, and other organizational streamlining efforts.

In addition to the job cuts, Intel has also decided to halt plans for constructing new manufacturing facilities in both Germany and Poland. Furthermore, it will decelerate construction work on its factories in Ohio and consolidate operations in Costa Rica by shifting some activities to its larger facilities located in Vietnam and Malaysia.

These developments reflect Intel’s ongoing cost-cutting agenda, which it had first alluded to in April. The company revealed that since then, its total workforce has already been reduced by approximately 15%, translating to the loss of about 15,000 jobs. This follows a similarly sized round of reductions last year, bringing the total number of job losses over the past two years to more than 30,000.

The company provided these details as part of its second-quarter financial disclosure. For the quarter, Intel reported a net loss of $2.9 billion, which included expenses related to restructuring efforts. Despite the significant loss, Intel’s revenue remained steady at $12.9 billion—slightly above market analysts’ expectations.

Looking ahead to the current quarter, Intel is anticipating another financial loss, with projected revenue ranging between $12.6 billion and $13.6 billion. The midpoint of that forecast, $13.1 billion, also surpasses analysts’ average estimate of $12.6 billion for the quarter ending in September.

In a message addressed to Intel employees, newly appointed Chief Executive Officer Lip-Bu Tan acknowledged the challenges the company has faced in recent months. “I understand that the past few months have presented many difficulties,” Mr. Tan wrote. “We are making some tough but essential choices aimed at simplifying our structure, boosting efficiency, and ensuring greater accountability throughout all layers of the organization.”

Back in April, Intel announced that it would trim its 2024 operating expenses to $17 billion, down from a previously projected $17.5 billion, with an even more ambitious goal of reducing expenditures to $16 billion by 2026. The company reiterated on Thursday that it remains on track to meet these targets.

Intel, once a symbol of Silicon Valley’s innovation and profitability, rose to fame in the 1990s as a leading supplier of microprocessors that powered personal computers. However, the company failed to adapt to changing industry trends—most notably, it missed the rapid rise of smartphones and has struggled to keep pace in the booming artificial intelligence (AI) sector, where companies like Nvidia have surged ahead.

Mr. Tan, a seasoned venture capitalist and former Intel board member, took over the CEO role in March. Since assuming leadership, he has prioritized trimming excess layers of management, accelerating product development, and enhancing the competitiveness of Intel’s chip offerings, especially in relation to rivals like Advanced Micro Devices (AMD). He has cautioned, however, that meaningful improvements will not be immediate.

Wall Street analysts have closely monitored Intel’s progress on its newest chip manufacturing process, a critical factor in determining the performance of its microprocessors. Patrick Gelsinger, who served as CEO until December, had bet heavily on a new fabrication process called “18A.” He believed this would allow Intel to at least match the technological capabilities of Taiwan Semiconductor Manufacturing Company (TSMC), the industry leader in advanced chip production.

However, Intel’s current leadership has backed away from such bold claims. While the 18A process still plays a key role in Intel’s roadmap for upgrading its microprocessor lineup, the company no longer asserts that it will rival the most cutting-edge offerings from TSMC. Mr. Tan also disclosed during an earnings call that Intel is actively developing a next-generation production process, dubbed 14A. He emphasized, however, that the company will avoid past mistakes—such as constructing new factories without securing commitments from outside clients.

In his message to employees, Mr. Tan was frank about the missteps that have contributed to Intel’s current predicament. “Over the past few years, we invested too heavily and too early, often without clear signals of sufficient market demand,” he explained. “This approach resulted in a fragmented and underutilized factory network. We now have to make course corrections.”

These strategic changes reflect a broader recalibration at Intel, which has found itself struggling to regain its footing in an industry that has evolved rapidly. As competitors have capitalized on advances in AI, mobile computing, and cloud services, Intel has at times appeared slow to respond.

Despite these challenges, Intel’s leadership remains optimistic about the company’s long-term prospects. Mr. Tan has stated that streamlining the organizational structure and focusing on core strengths will enable Intel to become more agile and innovative. He also highlighted the importance of regaining trust—not only among customers and shareholders, but also within the company itself.

In the short term, however, Intel’s employees and stakeholders are bracing for further upheaval. The scale of the workforce reductions underscores the severity of the company’s challenges, and the delayed or cancelled construction projects point to a cautious approach toward future investments.

While Intel’s current financial results show only modest revenue gains, the company hopes that a leaner structure and renewed focus on execution will pave the way for a stronger and more sustainable future. Yet the road ahead remains uncertain, especially in a semiconductor landscape increasingly dominated by agile, AI-focused competitors.

For now, Intel is betting that by cutting costs, refocusing operations, and learning from past missteps, it can restore its status as a leader in the chipmaking industry. Whether these efforts will be enough to spark a true turnaround remains to be seen.nderutilized. We must correct our course.”